Historic, archived document Do not assume content reflects current scientific knowledge, policies, or practices. USDA Forest Service Research Paper INT-171 July 1975 ^ ECONOMIC IMPORTANCE OF TOURISM IN MONTANA li Paul E. Polzin Bureau of Business and Economic Research University of Montana and Dennis L. Schweitzer Intermountain Forest and Range Experiment Station INTERMOUNTAIN FOREST AND RANGE EXPERIMENT STATION Forest Service U.S. Department of Agriculture Ogden, Utah 84401 Roger R. Bay, Director THE AUTHORS DR. PAUL E. POLZIN is a Research Associate in the Bureau of Business and Economic Research, Universitj^ of Montana, and a Research Economist, Intermountain Forest and Range Experiment Station, For- estry Sciences Laboratory, Missoula, Montana. He completed his graduate training in economics in 1968 at Michigan State University. DR. DENNIS L. SCHWEITZER has been Principal Economist and Project Leader for Economics Research, Intermountain Station, at the For- estry Sciences Laboratory in Missoula, since 1972. Earlier he worked at the Pacific Northwest Forest and Range Experiment Station in Port- land, Oregon, and the North Central Forest Experiment Station in St. Paul, Minnesota. He completed his graduate training in forest economics in 1968 at the University of Minnesota. CONTENTS Page INTRODUCTION 1 MONTANA INCOME FROM TOURISTS 2 How Tourists Spend Money 2 Direct Income Per Dollar Spent 5 Total Direct Income From Tourists' Expenditures . . 10 COMPARISONS OF THE TOURIST AND WOOD PRODUCTS INDUSTRIES 12 Comparison of Direct Income 12 Total Contributions to Personal Income 13 Linkages to Other Industries 14 Earnings and Employment 15 A FINAL WORD 18 PUBLICATIONS CITED 19 ABSTRACT About one-fourth of each tourist dollar accrues to Montanans as income; the proportion is smaller for expenditures by outdoor rec- reationists. It is unlikely that growth in tourism could offset income losses resulting from even moderate declines in timber harvesting. Tourist and timber industry employment differ in many respects. INTRODUCTION Montana's natural beauty and opportunities for outdoor recreation annually bring many thousands of visitors to the State. The Highway Department estimates that during 1971 approximately 3,770,000 out-of-State tourists spent, on the average, about $40 per visit within the State. Total expenditures exceeded $150 million. The number of visitors and their spending have often been cited to demonstrate the importance of tourism to Montana's economy. We feel these figures must be tempered with the recognition that only a fraction of tourist dollars directly accrues to Montanans. Tourist dollars are spent mainly on items such as food, equipment, and curios, most of which are not produced in Montana. Consequently, a significant portion of merchants' receipts quickly leave the State in payment for imported goods. To put tourism in its proper perspective in this paper, we estimate the number of tourist dollars that actually find their way into the pockets of Montanans. Because of the extensive opportunities for outdoor recreation in the State, we separately ex- amine the economic contributions of those tourists who are campers, hunters, and fishermen. Outdoor recreation and timber harvesting are sometimes viewed as competing uses of forest lands. After comparing the incomes derived by Montanans and other character- istics of these two industries, we show that trade-offs in employment would bring consequences that are neither simple nor obvious. 1 MONTANA INCOME FROM TOURISTS The economic importance of tourism to Montana depends not only on the number of tourists and the number of dollars they spend, but also on how they spend their money. We first examine how nonresident visitors distribute their expenditures among purchases of lodging, food, transportation, and all other items. (Because such information is severely limited for Montana, we draw heavily on studies conducted in other States.) After developing benchmark estimates for the "average" Montana tourist, similar esti- mates are made for three sub groups-- campers , hunters, and fishermen--whose spending patterns might be expected to differ. These figures are then used to estimate the pro- portion of tourist expenditures that accrue to Montanans as direct income. The "Average" Tourist A 1964 survey of outbound nonresident motorists indicated that 28 percent had Montana as their primary destination; the remainder were simply passing through the State (Wallace and Blake 1966, p. 84). Of the nonresidents staying at Montana lodging facilities, 52 percent were there for pleasure and the remainder were on business or some combination of business and pleasure. These are average figures for the entire year; during the summer, the proportion visiting for pleasure or to see relatives and friends rose to 73 percent. The average distribution of the expenditures of all non- resident visitors in that year is summarized in table 1. How Tourists Spend Money Table \ .--Distribution of expenditures of the "ccoera^e" tourist in Montana, 1964 Category Proportion of expenditures Percent Lodging Food Transportation All other 27 33 26 14 Total 100 Source: Wallace and Blake (1966, p. 94). Campers The distributions of expenditures by nonresident campers in several States are summarized in table 2. The Montana data reflect dollars spent by those tourists who chose to stay in established campgrounds in 1964. At that time, camping fees were much less common than today. The more recent studies in Arizona and Georgia led us to adjust these 10-year-old estimates as indicated. Is our adjustment reasonable? This question has to be answered on two levels. Our estimate is intuitively reasonable in that lodging remains a relatively small pro- portion of all expenditures by campers and is in general agreement with the estimates from other sources. Perhaps more importantly, our later estimate of the returns to Montanans from camper expenditures is relatively insensitive to the breakdown chosen. We estimate later that about $0.17 of the camper-dollar ends up as direct income; the 1966 Montana data yield $0.17 and the Georgia data $0.18. For every grouping of tourists, our later estimates of direct Montana income per dollar spent are within 1 cent of the values that would be obtained by using averages of the cited studies. Table 2. — Distribution of expenditures by nonresident campers Category In published studies : Estimated for : Montana in : this study Montana : Georgia : Arizona^ ■ - - - Percent - - - - - Lodging^ 3 11 Unknown 10 Food 50 29 36 35 Transportation . 32 36 44 38 All other 15 24 Unknown 17 Total , ' - ■ 100 . 100 100 ^ Includes camping and admission fees. ^ Lodging and all other expenditures could not be derived from study. Sources: Montana- -Wal lace and Blake (1966, p. 90). Georgia--Keeling and Hein (1970, p. 23). Arizona--Leaming and others (1970, p. 108). Fishermen Because there are no data available on how nonresident fishermen in Montana spend their money, we have estimated their spending patterns from published studies in Colo- rado, Arizona, and Wisconsin (table 3). Perhaps because of differences in defining expenditure categories, conflicting results appear among the studies; for example, the Colorado survey reports that a large share of expenditures by fishermen were for lodg- ing. Discrepancies also occur in the "Transportation" and "All other" categories. Probably because more than 4-out-of-5 of the respondents were from neighboring Illinois or Minnesota, the Wisconsin study showed a far smaller proportion was spent for trans- portation (Fine and Werner 1960, p. 2) than the other studies. As a consequence, a larger percentage was left over for "All other" expenditures. For Montana we assume that nonresident fishermen allocate 22 percent of their spending (excluding licenses) to lodging, which is somewhat less than the average tour- ist. We estimate $0.23 of every dollar is spent in the "All other" category- -mostly , fishing equipment and supplies --which all three studies reported to be significant. 3 Table 3. --Distribut-ion of eccpend-itures by nonresident fishevmen (Excludes l-ioense fees) : Estimated for Category : In published studies : Montana in : Colorado : Arizona : Wisconsin : this study ■Vevaent Lodging 33 18 22 22 Food 23 23 24 23 Transportation 29 34 12 30 Guides 2 1 2 2 All other 13 24 40 23 Total 100 100 100 100 Sources: Colorado--Rohdy and Lovegrove (1970, table 2). Arizona--Davis (1967) . Wisconsin--Fine and Werner (1960, p. 4). Correspondingly, the values for food and transportation are assumed to be below those of average tourists; food constitutes 23 percent of total spending, transportation 30 percent. Finally, a fifth expenditure category-- fishing guides--has been added for this analysis. Guide services can vary from showing clients where and how to fish to also providing lodging, food, and tackle. The studies report that payments to guides represent only a small portion of total spending by fishermen; we assume that only 2 percent is so spent in Montana. The three studies cited in table 3 derive their data from samples of nonresident fishing licenses. They do not distinguish between those whose primary purpose was fish- ing and others who fished as a sidelight to their visit. Thus, to the extent these samples contain the occasional fishermen, they may not accurately represent those attracted by quality outdoor fishing. Approximately one-third of all summer visitors in Montana bought fishing licenses (Wallace and Blake 1966, p. 70). Euntevs As with fishermen, no comprehensive studies of hunter expenditures have been pre- pared for Montana, Again we will rely on data for other States as a guide to estimating appropriate values for Montana. The distribution of expenditures for nonresident big game hunters in Colorado and Arizona are summarized in table 4. These surveys differ only in the "All other" and "Guide" categories. These differences appear to be definitional or due to the way we recombined categories for our tabular presentation; in both instances, the sum of these two categories is about the same proportion of total expenditures. In Montana we assume lodging accounts for 13 percent of total expenditures (ex- cluding licenses), which reflects the tendency of hunters to camp, use cabins, or even sleep in their cars (Davis 1967, p. 35). Both the Colorado and Arizona studies report significant expenditures for equipment and supplies. Consequently, the "All other" category is estimated to account for about 30 percent of expenditures. A Montana law requires nonresident big game hunters in certain areas to be accompanied by a licensed resident--often a guide or outfitter. Thus, 10 percent for the "Guide" category does not seem unreasonable. The relative importance of the "Food" and "Transportation" categories will be assumed to be 22 and 25 percent, respectively--a lower proportion than for the average tourist due to the upward adjustments in the other categories. 4 Table 4, — Distributions of eorpenditupes by nonresident big game hunters (Excludes license fees) Category : In published Colorado ; studies Arizona ; Estimated for : Montana in : this study - Percent - - Lodging Food Transportation Guides All other 12 23 26 13 26 14 18 28 3 37 13 22 25 10 30 Total 100 100 100 Sources: Colorado--Rohdy and Lovegrove (1970, table 1) . Arizona--Davis (1967, p. 34). Direct Income Per Dollar Spent Only a portion of the dollars spent by tourists ends up in the pockets of Montanans and the size of that portion depends on how the dollars are spent. Table 5 shows 1967 receipts and earnings for selected industries that cater to tourists. These data show that in-State earnings per dollar of receipts vary significantly among industries: for each dollar spent in hotels, $0.39 is retained by Montanans as personal earnings, but for each dollar spent in food stores only $0.10 goes into the pockets of residents. Although the data were taken in 1967, we do not believe the ratios of earnings to re- ceipts have changed. These ratios show the portion of tourist dollars that accrues to Montanans as direct income in the form of employees' wages and salaries and proprietors' income of those owning the businesses. Because the ratios do not reflect certain pay- ments to local utilities or manufacturers, portions of which do accrue to Montanans, the ratios underestimate income retained in the State. Given the earnings-to-receipts ratios and the distributions of spending, we can determine the share of tourist expenditures that accrue to Montanans. The "Average" Tourist ■ - ■ . • . ■ The distribution of the expenditures of the "average" tourist was summarized in table 1. Of those utilizing commercial accommodations, approximately two-thirds stayed in motels; most of the others utilized hotels or campgrounds (Wallace and Blake 1966, p. 60). So we estimate the earnings per dollar of receipts for lodging from "average" tourists was $0.25, slightly above the ratio of $0.21 reported for motels and far smaller than the ratio of $0.39 for hotels in table 5. The earnings per dollar of receipts in the "Food" category is assumed to be $0.25, because the information available suggests that out-of-State visitors spent about 90 percent of their food money in restaurants. We also know that about 15 percent of the nonresidents staying in Montana over- night did not arrive by automobile (Wallace and Blake 1966, p. 24). Unfortunately, data on income to Montanans from tourists' transportation expenditures are available only for sales of automobile-related goods and services. We simply do not know the earnings-receipts ratio for expenditures on bus, train, or airplane travel. We esti- mate that the Montana earnings per dollar of receipts for all transportation 5 Table 5. — Reae-vpts and earnings in selected Montana industries, 1967 Earnings, : Earnings , including : per $ of Industry category : Receipts : proprietors : receipts - - - - Thousands ----- Lodging Hotels (SIC 7011) $ 14,862 $ 5,813 0 . 39 Motels (SIC 7011) 14,914 3,175 .21 Trailer Parks (SIC 7031) 1,154 101 .09 Sporting and Recrea- tional camps (SIC 7032) 1 ,440 394 Food Eating and Drinking places (SIC 58) 95,694 25,391 .27 Foodstores (SIC 54) 247,524 24,829 . 10 Transportation Auto Repairs (SIC 753) 13 , 180 3 ,879 . 29 Gas Stations (SIC 554) 101,594 11,601 . 11 Other • ^ - Merchandise : General Merchandise (SIC 53) 104,936 18,869 .18 Apparel and Acces- sories (SIC 56) 47,311 7,821 .17 Sporting Goods (SIC 595) " 5,882 866 .15 Amusements Motion Pictures (SIC 78) 4,810 1,579 .33 Amusements (SIC 79) 7,555 2,341 .31 Proprietors' earnings estimated from U.S. Department of Commerce Regional Economics Information System, Washington, D.C., unpublished data. Sources: U. S. Bureau of the Census, Census of Business, 1967, Selected Services; Montana BC 67-SA28, U.S. Government Printing Office, Washington, D.C. 1969, table 2. U.S. Bureau of the Census, Census of Business, 1967, Retail Trade; Montana, BC67-RA28 U.S. Government Printing Office, Washington, D.C. 1969, table 2. SIC = Standard Industrial Classification 6 expenditures is $0.15--again referring to table 1 and reasoning that most spending is for gasoline rather than auto repairs and that commercial transportation does not significantly change this value. The Montana study also suggests that other expenditures were about evenly divided between recreation and merchandise. The earnings-receipts ratio in the "All other" category is estimated to be $0.23--the approximate midpoint between the values for merchandise and amusements in table 5. Given these local earnings per dollar of tourist expenditures and the distribu- tion of expenditures shown in table 1, the Montana direct income from each dollar spent by "average" tourists can be calculated from the following: [Montana earnings] [from "average" ] [tourist dollar ] $0.2212 (Proportion spent for lodging) (Proportion spent for food) (Proportion spent for transportation) (Proportion spent for all other) (0.27) X ($0.25)] (0.26) X ($0.15)] (Earnings per dollar for lodging) (Earnings per dollar for food) (Earnings per dollar for trans- portation) (Earnings per dollar for all other) [(0.33) X ($0.25) [(0.14) X ($0.23) We conclude, then, that the average dollar spent by tourists yields $0.22 in direct wages and income for Montanans. We emphasize that these calculations provide only a rough estimate of the impact of an average tourist dollar. Much of the data is out of date or incomplete. A number of key values are "guesstimates." Our chief purposes are to demonstrate a methodology and to provide an "average tourist" norm that can be compared with similar estimates for subgroups of tourists who camped, fished, or hunted in the State. Campers Earnings per dollar of lodging receipts is assumed to be $0.25, which is roughly halfway between the values for motels and recreational camps reported in table 5, because most campers occasionally stay in a motel or hotel. Wallace and Blake, (1966, p. 90) reported that approximately 40 percent of the camper's food dollar was spent in restaurants. Consequently, the value for grocery stores shown in table 5 was given a greater relative weight, and the earnings per dollar of receipts for food was assumed to be $0 . 17--considerably lower than for the average tourist. The ratio of earnings to receipts in the "Transportation" category remains unchanged at $0.15. Because both the Montana and Georgia studies suggest that campers spend considerably more for merchan- dise than for amusements, the earnings-receipts ratio in the "All other" category was reduced to $0.19, down from the $0.23 used for average tourists. 7 Table 6. --Montana direct income pep dollar spent by out-of-State recreationists lype : m coiTie Food 1 I all^ U\J 1. L a. L Guides of : per : Proper- : Earnings Propor- : Earnings Propor- : Earnings Propor-: Earnings Propor- : Earnings recre- : dollar : tion : per S of tion : per $ of tion : per $ of tion : per $ of tion : per S of d L XUIl J. b L. spent '. re ce ipt s Average $0.2212 = rn 1 4. « Cn 7"^^ $0.0675 + $0.0825 + $0.0390 + 0 + $0.0322 CampeTS , i / Oo l^u . lU X , J rni cn 1 7 w Cn 1 Qi Co n^7n 0 cn n*^?^ Fishermen .2000 = (0.22 X $0.25) + (0.23 X $0.22) + (0.30 X $0.15) (0.02 X $0.40) (0.23 X $0.18) $0.0550 + $0.0506 + $0.0450 + $0.0080 + $0.0414 Hunters .2058 = (0.13 X $0.25) + (0.22 X $0.19) + (0.25 X $0.15) + (0.10 X $0.40) + (0.30 X $0.18) $0.0325 $0.0418 + $0.0375 + $0.0400 + $0.0540 To calculate Montana's income from tourists staying in established campgrounds, we follow the procedure used for "average" tourists. These calculations are summarized in table 6 for all classes of tourists. For each dollar spent by campers, about $0.17 is retained by Montanans, almost one- fourth less than for all visitors. This difference is due to campers spending a greater proportion in categories with low earnings-receipts ratios, such as transportation, and the lower earnings per dollar of receipts in the "Food" and "All other" categories. Fishermen The Arizona and Wisconsin studies report that, of those fishermen using commercial accommodations, most stayed in motels (Davis 1967, p. 30; Fine and Werner 1960, p. 3). An earnings-receipt ratio of $0.25, the same as for the average tourist, will be used for the "Lodging" category. The Wisconsin study also reports that fishermen spent almost twice as much in grocery stores as in restaurants (Fine and Werner 1969, p. 4). We assign an earnings-receipts ratio for food of $0.22 in light of the lower Montana earn- ings ratio for grocery stores shown in table 5. In the absence of contradictory information, we again assume that each dollar spent for transportation will provide $0.15 of direct income. The value for all other expenditures will be assumed to be $0.18, based on our reasoning that very little was spent by fishermen for amusements as defined in table 5. Finally, the earnings per dollar of receipts for guides is set at $0.40. There are no hard data to support this assertion, but one would expect these activities to be relatively labor intensive and to have high earnings -receipts ratios. Based on these assumptions, and the distribution of expenditures sho\im in table 3, the Montana income per dollar of nonresident fishermen expenditure is estimated to be $0.20, as calculated in table 6. Hunters With the exception of food, earnings -receipts ratios for hunters are the same as for fishermen. We think $0.19 of each dollar spent by. hunters for food ends up as direct income because they probably spend more in grocery stores than in restaurants. The last lines in table 6 show that the average dollar spent by nonresident big game hunters generates about $0.21 in direct income to Montanans. 8 Recapitulation of Direct Income Fer Tourist BoHav The previous sections examined the direct economic impacts of dollars spent by four classes of out-of-State visitors to Montana. The analytical method used the findings of studies for other States in order to circumvent some of the data defi- ciencies for Montana, but a good deal of informed judgment was also required. Based on our best estimates the direct incomes generated by each dollar spent by tourists are about : "Average" tourists--$0 . 22 per dollar spent Campers -- .17 per dollar spent Fishermen -- .20 per dollar spent Hunters -- .21 per dollar spent The components of these receipts are pictured in figure 1. $0.30 - $.20 - $.10 - "AVERAGE" CAMPERS TOURISTS Accrues to Montanans as direct income n Does not ^8 Q O Z q; CO O LU UJ ^ Q < a. o a. 1/5 Z < 0£ o z o o o Q ^ °^ <^ O O UJ u- < I— 0£. CO 9 o 0£. FiSHERIVIEN HUNTERS Figure 1. — The way out-of-State tourists spend their dollars in Montana. Although these numbers should not be taken too seriously, we believe that the overall ranking is accurate; the Montana income per dollar of expenditure is lower for out-of-State outdoor recreationists than for the more inclusive category of out-of-State tourists. Campers, fishermen, and hunters spend a smaller percentage of their dollars on the categories with high earnings -receipts ratios, such as motels, restaurants, and amusements, and spend relatively more on transportation, groceries, and merchandise that brings low earnings per dollar of receipts. Or, stated in a different way, the economic advantage to Montanans of expenditures by outdoor recreationists, on a per- dollar-spent basis, is less than for "average" motel- and restaurant -dependent tourists. Total Direct Income From Tourists' Expenditures The State Highway Commission of Montana (in unpublished data) has made estimates of total visitor expenditures by updating certain findings of the 1966 Montana Travel Study. The Commission estimates that during 1971 there were approximately 3,770,000 out-of-State visitors who spent, on the average, about $40 per visit. Total expend- itures, then, were roughly $150 million. Earlier we estimated that about $0.22 of each dollar spent by the "average" tour- ist became direct income to Montanans. Applied to the above estimate of total expend- itures, "average" tourists accounted for $33 million in direct wages, salaries, and proprietory incomes. These figures and estimates of expenditures by out-of-State outdoor-oriented recreationists are summarized in table 7. Recall that the recreation- ists' expenditures are included in those of the "average" tourists. The Montana and Georgia studies suggest that the average expenditure by campers may be about 60 percent of the expenditures of the average tourist. Neither study indicates a significant difference in the length of stay between campers and all tourists (although camping parties appear to be somewhat larger than average) . There- fore, $24.00 (= 0.60 X $40.00) is estimated to be the average expenditure per camper per visit. Table 1 .--Individual and total tourist contributions to direct income of Montanans ^ 1971 Type of visitor Direct : income ; per dollar : spent : Average expenditure per visitor Direct income per visitor Number ; of : visitors ; Total Expenditure : Total ; direct : income-^ Average tourists^ $0.22 $40.00 $ 8.80 3,770,000 $150,800,000 $33,176,000 Hunter .21 78.00 16.38 12,000 3936,000 197,000 Fishermen .20 58.00 11.60 32,500 31,885,000 377,000 Camper .17 24.00 4.08 400,000 9,600,000 1,632,000 Wages, salaries, and proprietorial income to Montanans. Hunters, fishermen, and campers are included in the figures for "average" tourists. Excludes license fees. 10 The Montana Travel Study (Wallace and Blake 1966, p. 28) estimated that about 11 percent of the nonresident tourists in 1964 used campgrounds. (Wallace and Blake did not cover those who camped outside established campgrounds, and neither do we.) If thi proportion held in 1971, more than 400,000 campers spent about $9,600,000, with direct income to Montanans of about $1,600,000. Only fragmentary, unpublished data are available on spending by nonresident fisher men and hunters. From such information we speculate that fishermen spent half again as much as average tourists, or about $58.00 per visit, and hunters twice as much, perhaps $78,00 per visit (both figures exclusive of license fees). The Montana Fish and Game Commission has reported that of the 177,500 nonresident fishing licenses sold in 1971-72, 145,000 were for only 1 day. We believe these sales were to "casual" fishermen having other major business in the State. This leaves approximately 32,500 "serious" nonresident fishermen who purchased either 6-day or season licenses. We use the 12,000 big game hunting licenses sold as our estimate of the number of nonresident hunters. From these figures we estimate the following contributions in direct income by out of-State sportsmen: hunters, $197,000; fishermen, $377,000. 11 COMPARISONS OF THE TOURIST AND WOOD PRODUCTS INDUSTRIES With the information we have developed for the tourist industry and comparable, published data for the forest products industries, we can compare the economic impor- tance of tourism and timber production within Montana. We compare the direct income generated by each, their total economic importance, and finally the characteristics of employment in the two industries. Comparison of Direct Income The relationship between timber harvested and the numbers of jobs generated de- pends on many factors. An increase in the harvest may have one effect if it occurs during an economic slump when there are many unemployed Montanans who could be put to work and quite a different effect if it occurs during a boom period. Recognizing these difficulties, Johnson (1972) and Polzin (1973) have estimated that a million- board- foot change in Montana's timber harvest is associated with a change of approx- imately five jobs in the wood products industry and approximately $37,500 in personal earnings, that is, a change of 1 million board feet of timber harvesting will lead to a change of $37,500 in direct income to Montanans . Given the data in table 7, we can calculate the number of nonresident visitors required to match the direct income of the wood products industry. For example, we know the "average" tourist generates $8.80 of direct income. Then, C$37,500) $8.80 = 4,260 "average" tourists. [Number of average] [tourists neces- ] [sary to generate ] [$37,500 of direct] [income ] This suggests that the marginal wood products worker earns $7,500 per year (= $37,500 V 5), slightly less than the $8,300 average annual earnings of all wood products employees. In contrast, we see no reason to believe a marginal tourist would spend any more or less than the "average" tourist. To be consistent with our analysis of the tourist industry, we have excluded any payments by the wood products industry for items such as local taxes and utilities. 12 Table 8. — Some relationships among direct incomes to Montanans generated by nonresident visitors and by timber Type of visitors Expenditures generating same direct income as 1 million board feet of timber Visitors generating same direct income as 1 million board feet of timber^ : Number as percent Number : of 1971 visitors Number of board feet of timber generating same direct income as 1971 to- tal number of visitors^ Average tourists^ Hunters Fishermen Campers $170,000 178,000 188,000 221,000 4,260 2,290 3,230 9,190 0.1 19.1 9.9 2.3 885 million 5 million 10 million 44 million Based on average expenditures and numbers of visitors reported in table 7. Total annual timber harvest in Montana during 1971 was about 1,300 million board feet. Hunters, fishermen, and campers are included in the figures for "average" tourists. To find the total expenditures necessary to generate this direct income, we can either divide $37,500 by $0.22 (the direct income per dollar spent) or we can multiply 4,260 tourists by $40.00 (average total expenditure). In either case we learn that roughly 4,260 "average" tourists must spend about $170,000 to generate the same direct income as that resulting from the harvesting and processing of a million board feet of timber. Comparable values have been calculated for the subgroups of nonresident hunters, fishermen, and campers and are displayed in table 8. Policymakers inclined to develop the recreation economy to offset a possible decline in the harvest of timber would find their greatest opportunities in promoting general tourism rather than concentrating on hunting and fishing. A disproportionate increase in hunters and fishermen would be required to make any appreciable difference to Montanans. Total Contributions to Personal Income As direct income to Montanans is spent and respent within the State, it multiplies. Johnson (1972) estimates that the income multiplier for Montana is 3.09; total per- sonal income will change by $3.09 for each $1.00 change in direct income. Earlier we estimated that all tourism created $33 million in direct income to Montanans; eventually, this figure is multiplied to about $102 million. The Regional Economic Information System reports that direct income in the private wood products industry (excluding the Forest Service and other government agencies) was approximately $81 million in 1971. Income multiplication suggests that timber harvesting accounted for about $250 million in total personal income in Montana. The U.S. Department of Commerce reports that total personal income in Montana was $2,627 million in 1971. Thus, the $102 million created directly and indirectly by tourists represents slightly less than 4 percent of the total. Timber harvesting accounted for about 9.5 percent of total personal income in the State in that year. 13 We do not believe that tourists and timber are good substitutes for one another. The industries are quite dissimilar; they employ different kinds of workers, pay different wages, and buy from different suppliers. A change in one of these industries, even if compensated by an appropriate increase or decrease in the other, would have repercussions throughout the State. In the following sections we outline some of the differences between the wood products and tourist industries by examining their interrelationships with other Montana industries and their employment and earnings characteristics. Linkages to Other Industries The tourist and wood products industries use different goods bought from different s;ippliers. Therefore, a switch from wood products to tourism (or vice versa), may bring economic repercussions beyond those measured in terms of direct income and employment characteristics. The relationships between suppliers and buyers, often called "linkages," are best analyzed using input-output techniques. Although the input-output model (Mitchell 1971) available for Montana is not well suited for our approach, it can shed some light on the different interindustry linkages of the tourist and wood products industries. Table 9 presents the distribution of expenditures by wood products, wholesale and retail trade, and service industries. (Figures for the trade and service industries are not comparable to those presented earlier. Figures in table 9 include many more fimis than just those oriented toward tourists, and the expenditures by the wholesale Table 9. — D-istviloution of the ax>evage dollar sipent by selected Montana industries : Purchasing industries : Wood ; Wholesale and : Selling industries ; Logging ; processing; retail trade-*- : Services 1. Logging $0.11 $0.14 2. Wood processing .03 3. Other manufacturing .02 .01 $0.02 4. Transportation .10 .17 .07 5. Communications and public utilities .01 .03 .06 $0 .01 6. Construction .03 .01 7. 8. Agriculture and mining Wholesale and .01 retail trade .04 .05 .03 .02 9. Services^ .02 .03 .06 .04 10. Household's .50 .32 .61 .65 11. State and local governments .01 .06 .05 .01 12. Federal government .10 .02 .05 .03 13. Out-of-State .09 .10 .04 .24 Total $1.00 $1.00 $1.00 $1 .00 Excludes purchases of goods sold. Including finance, insurance, and real estate. 14 and retail trade industries do not include the costs of goods sold.) Reading down the columns of the table shows how the average dollar was spent. For example, logging firms spent $0.10 for services purchased from transportation firms (row 4). Missing entries reflect small or no purchases. We see that logging and wood processing firms buy heavily from other wood products firms and the transportation industry. The largest entries for wholesale and retail trade, excluding wages and salaries paid to households, are for transporta- tion, communications and public utilities, and services. Many of the figures for the service industry are zero or very small, indicating that they buy little from other firms. This is to be expected because the service industry, as defined in the avail- able input-output analysis, includes many firms whose primary output consists of services provided by people. This is reflected in the large purchases from "house- holds," which include wages and salaries. The interindustry linkages shown in table 9 imply that different suppliers would be affected by changes in the wood products and tourist industries. For example the relative impact on transportation would be greater for an increase in wood product than for tourism. Conversely, communications and public utilities would benefit more from growth in trade and the services. The low pay of tourist-oriented jobs has been mentioned by others (Johnson 1968). Average annual earnings for the wood products and other selected industries confirm these findings (table 10). For a more detailed examination of employment in Montana's wood products industry, see Porterfield (in press). During 1971, workers in wood pro- ducts averaged $8,300 in earnings. None of the industries that serve out-of -State tourists even comes close to this figure. In fact, workers in lodging and eating and drinking places, establishments most closely associated with tourist spending, average less than one-half that amount. Employees in foodstores and amusement places fare better, but jobs associated with the harvesting and processing of timber still pay higher wages than those oriented toward tourism. Earnings and Employment Table 10 .--Average annual earnings of wage and salary workers in selected industries, Montana, 1971 Industry Average annual wages and salaries Wood products (SIC 24+25+26+08) $8,300 Hotels, motels, and lodging places (SIC 70) 3,300 Eating and drinking places (SIC 58) . 3,200 Foodstores (SIC 54) 5,400 Amusements (except motion pictures) (SIC 79) 3,600 Sources: U.S. Department of Commerce, Regional Economics Infor- mation System, unpublished data, 1974. (Supplied through Montana Department of Intergovernmental Services.) SIC = Standard Industrial Classification. 15 Table 11 .--Proportion of employees in selected Montana industries hy sex and mcrnber of weeks worked^ 1970 ; Male : Number of weeks worked Industry : employees : 50-52 : 27-49 : 1-26 ------- - -Percent- -------- Wood products-^ 96 63 29 8 Foodstores 54 67 17 16 Gasoline service stations 91 65 18 17 Eating and drinking pi aces 30 44 25 31 General merchandise stores 29 60 21 19 Hotels and lodging places 30 52 22 26 ^ Includes logging, sawmills, planing mills, and millwork, miscellaneous wood products, fumiture and fixtures, and paper and allied products. Sources: U.S. Bureau of the Census, Census of Population: 1970, Detailed Characteristics, Final Report PC (1-D28) , Montana, U.S. Government Printing Office, Washington, D.C., 1972, tables 185 and 186. Most jobs in wood products are filled by males. Tourist-oriented industries employ mostly females, which accounts for at least a portion of the inequality in earnings. Table 11 reports that 96 percent of the workers in wood products are male, .-^mong in- dustries catering to tourists, only gasoline service stations, with about 91 percent male, approach this figure. In lodging places and restaurants, 70 percent of employees are women. The regularity of employment also favors the wood products workers. Table 11 shows that during 1969 about 63 percent of the experienced labor force employed in wood products worked 50-52 weeks. Of those remaining, 29 percent worked 27-49 weeks and 8 percent worked less than 26 weeks. Among tourist industries, foodstores and gasoline service stations had a slightly higher proportion working year-round. However, they also had a greater share working less than half of the year. Year-round employees constitute even a smaller share of the total in the other industries that cater, at least in part, to out-of -State tourists. Both the wood products and tourist industries are distinctly seasonal, as illus- trated in Figure 2. Although this seasonality of employment varies somewhat from year to year in response to economic conditions, it appears to be consistently greater for the tourist industry. In addition to working fewer weeks per year, there is some evidence that employees in tourist-oriented industries also work fewer hours per week. The Montana Department of Labor and Industry reports that during 1971 workers in manufacturing (which includes wood products) averaged 39.8 hours per week. The average weekly hours for wholesale and retail trade workers was 36.0 and for services the average was 34.6 hours. (See Montana Department of Labor and Industry, Montana Employment and Work Force Supplements, 1971-72, Helena, 1973, Suppl . II, p. 37.) 16 12,000 10,000 8,000 c ^ 6,000 _o a E 4,000 2,000 0 Eating places (SIC 58) ^X"""*'*'^'^'*'*' Wood products (SIC 24) lltlllMlllllllUUtt' Foodstores (SIC 54) Lodging places (siC 70) I I I I I I I I I I FMAMJ JASON Month Figure 2.— Monthly employment in the Montana tourist and tirnbev industries, 1971. (SIC -- Standard Industrial Classification. ) Source: Montana Department of Labor and Industry , "Employees of Montana Nonagrioultural Payrolls, 1971," Suppl. 1, Helena. 1973. In light o£ these findings, we could describe the average wood products employee as male, earning about $8,300 in wages and salaries, and working for most of the year (but with some seasonal layoffs). In contrast, the typical employee serving tourists is more likely to be female, earn about one-half to two- thirds of that salary and work for fewer weeks per year. These characteristics do not make tourist jobs inherently undesirable; in fact, they may be very desirable for working wives, students, or others. But the differences between the industries suggest that a shift from one to the other would be accompanied by significant changes in Montana's labor market. Jobs created in one sector might not match the needs, desires, or qualifications of the unemployed. Simply matching job decreases with corresponding increases in other industries does not tell the whole story, for one job may be full time and relatively high paying while the other is seasonal with low wages. 17 A FINAL WORD Simply looking at total expenditures of tourists dramatically overestimates the number o£ dollars which end up in the pockets of Montanans. Based on the data presented here, we believe that between $0.20 and $0.25 of the average tourist dollar becomes direct income to residents of the State. Further, spending patterns suggest that dollars spent by motel- and restaurant-dependent tourists contribute more to the direct income of Montanans than do equal numbers of dollars spent by outdoor-oriented tourists, such as campers, hunters, and fishermen. Timber harvesting and tourism have been viewed by some as competing uses of Montana's resources. We calculated the niomber of tourists needed to offset the economic consequences to Montanans of reducing the timber harvest. In each case we examined, a very large increase in tourism would be required. Thus, we conclude that, for all practical purposes, the State could not generate sufficient growth in tourism to counter-balance even moderate declines 'in timber harvesting. This is not to say that tourism and recreation cannot be of immense economic value. If sufficient expenditures can be stimulated, many local economies may be strengthened (Beardsley 1971). However, such strengthening is an extremely difficult task. It would be most desirable to try to develop tourism as a complement to, not a substitute for, timber production. Further examination of the tourist and vvood products industries revealed that simply trading timber harvesting for increased tourism, even if successful in generating equivalent spending, may prove unsatisfactory. There are simply too many less-than- obvious differences in secondary economic consequences and the nature of the jobs in the two industries. In this study we have looked at the tourist and timber industries from the point of view of residents of Montana. Although important, this perspective is not a suffi- cient basis for policy formulation. In terms of the National Environmental Policy Act, we have concentrated on a regional economy without paying similar attention to the na- tional economy. The distinction is especially important in Montana where more than 80 percent of the forested land base is in Federal ownership. To make judgments about what should be done without examining alternatives from the national viewpoint- - without defining the economic implications of the tourist and timber industries to the nation as a whole--would be shortsighted. In this paper we have just taken one step in developing information that might be used to determine how Montana's forest re- sources might best serve the State and the Nation. 18 PUBLICATIONS CITED Beards ley, Wendell G, 1971. The economic impact of recreation development: a synopsis. In Recreation Symp.'Proc, p, 28-32. Northeastern For. Exp. Stn. , USDA For. Serv. , Upper Darby, Pa. Davis, William C. 1967. Values for hionting and fishing in Arizona, 1965. Coll. Bus. and Public Adm. , Univ. Ariz. , Tucson. Fine, I. V. and E. E. Werner. 1960. Economic significance of fishing in Wisconsin. Bur. Bus. Res. and Serv., Univ. Wise. , Madison. Johnson, Maxine C. 1968. The tourist industry: some second thoughts. Mont. Bus. Q. , p. 20-26, Bur. Bus. Econ. Res., Univ. Mont., Missoula. Johnson, Maxine C. 1972. Wood products in Montana. Mont. Bus. Q. 10(2). Bur. Bus. Econ. Res., Univ. Mont., Missoula. Keeling, William B. and Polly W. Hein. 1970. Characteristics of out-of-State campers. Div. Res., Univ. Georgia, Athens. Learning, George F. , James M. Broer, Nat de Gennaro, and Marley Jannagen. 1970. The economic impact of the Oryon Pipe Cactus National Monument. Div. Econ. and Bus. Res., Univ. Ariz., Tucson. Mitchel, Donald 0. 1971. An updated input-output study of Montana. M.S. Thesis, Mont. State Univ., Bozeman. Polzin, Paul E. 1973. Economic impact of proposed timber management guidelines, Reg. 1, U.S. For. Serv. Reg. Off., Missoula, Mont. Porterfield, Richard L. In press. A profile of forest industry employment in Montana. USDA For. Serv. Res. Pap. INT- . Intermt. For. and Range Exp. Stn., Ogden, Utah. Rohdy, D. D. , and R. E. Lovegrove. 1970. Economic impact of hunting and fishing expenditures in Grand County, Colo- rado, 1968. Colo. State Univ., Fort Collins. Wallace, Robert F. , and Daniel R. Blake. 1966. Montana travel study. Bur. Bus. Econ. Res., Univ. Mont., Missoula. 19 * U.S. GOVERNMENT PRINTING OFFICE; 1975 — 677-328 / 4 REGION NO. 8 Headquarters for the Intermountain Forest and Range Experiment Station are in Ogden, Utah. Field Research Work Units are maintained in: Boise, Idaho Bozeman, Montana (in cooperation with Montana State University) Logan, Utah (in cooperation with Utah State University) Missoula, Montana (in cooperation with University of Montana) Moscow, Idaho (in cooperation with the University of Idaho) Provo, Utah (in cooperation with Brigham Young University) Reno, Nevada (in cooperation with the University of Nevada) GROWING from; Hi U.S. foresHry CENTENNIAL